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Iron ore is a major concern for supply disruption in Australia
Iron ore futures rose Thursday on concerns about disruptions in Australian'supply due to ports being closed in the Pilbara area following a cyclone. As of 0226 GMT, the most-traded contract for?May?iron ore on China's Dalian Commodity Exchange was trading 0.31% higher. It cost 818 yuan (US$118.45) per metric ton. The benchmark April Iron Ore on the Singapore Exchange rose by 2.15% to $107.45 per tonne. Pilbara Ports announced on Thursday that the ports at Ashburton and Cape Preston West were closed due to Tropical Cyclone Narelle. This has led to concerns about iron ore supplies from Australia, which is the top exporter. The gains, however, were limited?due?to production restrictions in China's iron ore hub?of Tangshan which could?result in a lower demand. Local authorities reported that the city activated an emergency level-2 response on March 25 due to heavy air pollution. Mysteel, a consultancy, said that steel mills in Tangshan also face restrictions on scrap trucks entering their facilities. High energy prices are causing concern about global inflation and a decline in expectations of U.S. rate cuts. A note from Shanghai Metals Market said that the 'broader caution' has increased the risk of price corrections across bulk commodities. Coking coal and coke, which are used to make steel, fell by 0.96% each on Thursday. The benchmarks for steel on the Shanghai Futures Exchange were mixed. Rebar,?hot-rolled?coil and wire rod all traded at the same price. Stainless steel rose 0.66%. ($1 = 6.9058 Yuan) (Reporting and editing by Sonia Cheema; Ruth Chai)
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Sources say that the sale of Jindal Steel to Thyssenkrupp has been stalled over pension and energy costs.
Four?people with knowledge of the matter have said that discussions about a possible sale of Thyssenkrupp Steel Europe to Jindal Steel International may be called off because of differences regarding pension liabilities, energy costs and investments. Despite the fact that?talks are still ongoing over a possible sale of 'Thyssenkrupp - Steel Europe (TKSE), and an agreement could still be reached, a deal now seems less likely. One person said that the companies may decide to stop official negotiations as early as next month. Thyssenkrupp tried to sell TKSE'several times over the last decades. If TKSE is not sold, it would be a blow to the plan of Thyssenkrupp's CEO Miguel Lopez who wants to transform the storied German Engineering Group into a holding. This will involve divesting stakes from all its business divisions ranging between car?parts and clean-tech. The people who spoke to us said that a number of factors are complicating the talks, including 2.4 billion euro ($2.8 billion) in pension?liabilities linked to TKSE. These liabilities have posed a challenge for past sales attempts, and there is also disagreement over the amount of future investment needed. The second source also said that Jindal Steel International has become increasingly uneasy over the rising costs of energy in Europe. The energy costs in Europe are already higher than those in the United States or Asia. However, they have increased further due to the Iran War. Thyssenkrupp announced on Wednesday that confidential talks continued with Jindal Steel International, and representatives of the labour movement. The parties will need to agree on valuation, obligations and future investments. Jindal Steel International (the?international steel?arm?of the Naveen Jindal Group) had no comment immediately. Juergen Kerner's, Thyssenkrupp’s deputy supervisory Board chairman, said last week that talks have stalled. Lopez also stated that EU plans to protect the underperforming steel industry in the EU had increased investor confidence and strengthened Thyssenkrupp’s position in negotiations. Jindal Steel International made a preliminary offer to TKSE in September. This included the completion of a new green steel production facility in Duisburg, and a commitment for more than $2.31 billion in order to increase electric arc furnace capacities.
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Investors reassess Middle East peace prospects as oil prices rise
Oil prices rose?on Friday, recovering some?previous-day's losses, as investors reexamined the prospects for a?deescalation of conflict in the Middle East. Iran also said that it was still evaluating a U.S. plan to end the conflict, which had disrupted the energy flow. Brent futures increased $1.13 or 1.1% to $103.35 a bar by 0051 GMT. U.S. West Texas intermediate crude futures were also up $1.08 or 1.2% at $91.40 a bar. Both benchmarks fell more than 2% Wednesday. Iran's Foreign Minister?said that despite reviewing the proposal, it has no intention to hold talks in order to end the growing conflict in the Middle East. Karoline Leavitt, White House press secretary, said that Donald Trump would hit Iran harder if Tehran refused to acknowledge that it had been "defeated military" Tsuyoshi ueno, senior researcher at NLI Research Institute said that optimism regarding a possible ceasefire had faded. He said that Washington's 'barrier of expectation' was high and the oil price could be volatile if both sides do not negotiate or take military action. According to three Israeli sources who are familiar with Trump's plan, the '15-point' proposal sent via Pakistan calls for Iran's highly enriched uranium stocks to be removed, enrichment halted, its ballistic missile programme curtailed, and funding cut off for regional allies. The conflict has almost completely stopped shipments through Strait of Hormuz. This is the route that carries one-fifth of all crude oil and natural gas shipped around the world. The International Energy Agency called it the largest oil supply disruption ever. Sources said that India has purchased its first cargo of liquefied gas from Iran in many years, after the U.S. lifted temporary sanctions on Tehran's refined fuels and oil. During talks on Wednesday, the Japanese prime minister Sanae Takaichi requested that Fatih Birol 'coordinate an additional release of oil stocks. Tokyo is seeking to protect itself against a long-term Middle East conflict. Three Iraqi energy officials stated on Wednesday that the production of Iraqi oil has dropped, and that storage tanks have reached critical levels. According to market data, calculations show that at least 40% of Russia’s oil export capability is halted following Ukrainian drone strikes, a disputed assault on a major pipeline, and the seizure or tankers. The U.S. crude oil inventories increased by 6.9m barrels, to 456.2m barrels during the week ending March 20. This is the highest level since June 2024. It also far exceeded analysts' expectations based on a poll that predicted a 477,000 barrel increase. (Reporting and editing by Edmund Klamann, Kevin Buckland and Yuka Obayashi)
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Worker sues Valero over Texas refinery explosion
A man who claimed to have been injured in an explosion at Valero Energy’s Port Arthur, Texas refinery Monday night filed a suit on Wednesday with a state district court, alleging that the?company?failed?to properly maintain the refinery. The lawsuit filed at the Jefferson County District Court of Beaumont, Texas, is seeking more than $1,000,000 in damages. A Valero spokesperson had no immediate comment on Wednesday night. Valero filed a report with the Texas Commission on Environmental Quality (TCEQ) on Tuesday. The company stated: "An unexpected release of fluid from Complex?2 caused an ignition event, and multiple process units were upset." Jonathan Jaimes, who was working at the Port Arthur refinery in east Texas near the Louisiana border, was present when a diesel hydrotreater explosion shook homes up to 18 kilometres away. "(Jaimes played no role in the tasks or events that led to the explosion. According to the lawsuit, "the blast and heat of the fire from the explosion caused him to be injured as a result." The lawsuit stated that Jaimes suffered injuries to his back, neck, spine, and other parts. He is also suffering from a?post-traumatic stress disorder. In an emailed message, Kyle Findley, an lawyer at Arnold & Itkin who represents?Jaimes said, "This wasn't an unavoidable incident - it was a result of gross negligence, and a flagrant disrespect for worker safety." Findley stated that Valero was aware of the risks in this facility but chose to ignore them. "If a company shows such a disregard for the safety of their workers and the community around them, they must be held responsible." Jaimes refused to comment when contacted by a representative of the law firm Arnold & Itkin.
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Australia's Lynas signs potential rare earths agreement with South Korea's LS Eco Energy
Australia's Lynas rare Earths and LS Eco Energy, a South Korean company, announced on Thursday that they would 'work together' to process rare-earth metals to meet the demand of customers scrambling for non-Chinese suppliers. According to a preliminary 'agreement', LS Eco Energy will build a processing facility in Vietnam that will supply rare earth oxides. The South Korean company plans to use these metals in the U.S. to produce permanent rare earth magnets. LS has stated that it plans to begin operations at its Vietnam factory by the fourth quarter of this calendar year. Rare earths are used in tiny but critical quantities to make magnets for everything from iPhones to cars and F-35 jets. China has dominated global supply of rare earths for many years, but export restrictions imposed in response to U.S. president Donald Trump's tariffs are encouraging other nations to find alternative sources. Lee Sang-ho is the CEO of LS Eco Energy. He said that customers from the automotive, industrial and other sectors were trying to establish supply chains outside of China. He said that as China has weaponised rare Earths, they must quickly create a value chain by purchasing non-Chinese earths at premium prices. Lynas said the new facility would help it supply more metallised NdPr (Neodymium-Praseodymium) and selected heavy rare earth products, with the first stage to focus on ?samarium, used in the aerospace and automotive industries. The two companies also agreed to separate deals in which Lynas and LS Eco Energy, the largest rare earth 'producers outside China, would both cross-subscribe for about A$30 millions ($20.84 mln) of convertible instruments. LS 'Eco Energy', a division of LS Cable & System (a major cable manufacturer), hopes to use metals expertise while utilizing the group’s existing factory locations in Vietnam and the United States in order to'reduce costs. Non-Chinese firms have struggled to compete with Chinese competitors on price and technology. Projects are stuck in the 'drawing board' for years. Companies are finding it more difficult to invest in the production of key minerals, such as those needed for electric motors, due to the slowing EV demand.
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ROI-Inflation-spooked rates markets have overshot: McGeever
The markets overshoot. And the recent dramatic increase in "bets" on higher interest rates due to the Middle East energy crisis is just the latest example: the move is logical but its magnitude is questionable. The Iran?war is not over and the markets are still 'in flux' as the dust settles after one of the most busy central bank weeks of recent years. Rates traders may want to take a pause and reevaluate. The abrupt change in global rates reflects concerns about the short-term impact on inflation of the soaring prices for oil and gas. Federal Reserve now has a higher probability of raising U.S. interest rates in this year rather than cutting them. The European Central Bank and Bank of England will also likely raise their rates multiple times starting next month. Zoom in on the shifts in Europe. On February 27, a day before the joint U.S. - Israeli strike on Iran, UK rate futures indicated 50 basis points of ease by the end of the year, or two quarter point rate cuts. This has now flipped into almost 75 basis point of tightening or three rate hikes. It is remarkable to see a 125-basis-point swing in just a few weeks. Euro zone futures are now pricing in two rate increases, from implying the ECB would keep its key policy rate at 2% throughout this year. This hawkish course could be realized. The policymakers have not recovered from the mistake they made in 2021-22 when they misread "transitory inflation". The?last two time they raised rates when oil was well above $100 per barrel, in 2008 and 2011, they were widely accused as making policy mistakes. Limits of 2022 Comparative Analysis Analysts are drawing comparisons between the current energy crisis and the shock caused by Russia's invasion in Ukraine? in February 2022, which helped to fuel the worst bouts of inflation on developed markets for decades. There are some key differences. Interest rates in February 2022 were significantly lower than what they are now. The G4 central banks' policy rates were near zero lower bound at that time. In addition, trillions of dollars in stimulus money for pandemic fighting and the explosion of economic activity following lockdowns also contributed to inflation in 2022. Early 2022, real interest rates were negative. The combination of super-easy fiscal policy and monetary policies meant that inflation was far from temporary. The U.S. inflation rate has not returned to its target despite the biggest hike cycle in over 40 years. Today, fiscal stimulus is on the agenda. Governments from Washington to Tokyo and Berlin are planning to cut taxes while spending heavily on energy and defense. These volumes are nowhere near as large as the pandemic-fighting package that was worth at least 10% GDP. GOLDMAN AND CITI STICK WITH THE U.S. RATE CUTS VIEW Goldman Sachs economists and Citi analysts are part of a shrinking group that is fighting the tide of forecast revisions. They also want the Fed to act quickly and raise rates in order to curb price pressures. Jan Hatzius, his team and Goldman still expect two Fed rate reductions this year. Andrew Hollenhorst and team from Citi are still calling for three. The argument is that any inflation will be temporary, perhaps lasting a few weeks, but the risks for growth and employment are much greater. They expect a temporary shock to the supply that will raise prices, but also deal a greater blow to demand. It's not impossible. The Purchasing Managers' Index data released on Tuesday revealed that the U.S. Private Sector output in March was at its lowest level in 11 months. Overall activity in Europe fell to a 10 month low. And activity in Britain grew at its slowest rate in six months. The rate markets are understandably on edge due to the "speed and magnitude" of the energy shock. It will be hard to justify raising interest rates when unemployment and growth are slowing, even if inflation is higher than target in the U.S. or Britain. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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US oil prices increase as investors evaluate Middle East deescalation
U.S. Oil Prices rose in the early trade on Thursday. They recovered a portion of their previous day's loss as investors assessed prospects for de-escalation?in the Middle East. Iran also reviewed the U.S. proposal that would end the Gulf War, which has caused energy supplies to be disrupted. U.S. West Texas Intermediate Crude Futures?climbed over $1 to $91.42 per barrel at the opening?and were 93 cents or 1% higher at $91.25 per barrel as of 2225 GMT. WTI fell 2.2% on Tuesday. A senior Iranian official said on Wednesday that Iran was still reviewing a U.S. plan to end the war in the Gulf despite a negative initial response. He indicated that Tehran has not yet rejected it outright. White House Press Secretary Karoline Leavitt stated that U.S. President Donald Trump would hit Iran harder if Tehran refused to accept the fact that?the nation had been "defeated militaryly". Iranian officials have publicly dismissed the idea of any negotiation with 'the Trump administration. The 'apparent delay' in responding to Pakistan after it submitted a '15-point proposal for Washington on behalf of Tehran, seemed to indicate that some in Tehran were considering the idea. (Reporting and editing by Edmund Klamann; Yuka Obayashi)
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Boliden, Sweden's mining company, expects a hit in Q1 earnings due to seismic activity.
Boliden announced on Wednesday that it expected earnings for the first quarter of 2026 - before interest, taxes and depreciation - to be impacted by about 400 million Swedish crowns ($42.77m) due to production being impacted in its Garpenberg Mine because of abnormally high earthquake activity earlier this month. Swedish miner reported its first-quarter production was slightly less than 0.8 million tonnes, down from an initial?expectation that slightly more than 0.9 million tonnes. The company said that production in the worst affected part of the mine will not resume until 2026. Garpenberg said that until further notice, its production will be approximately 30% of its earlier guided capacity, which was 3.7 million tonnes per year. A copper and zinc miner stated that a "large part" of the mine's infrastructure, such as crushers, hoisting systems, and workshop, were not affected by the earthquake activity. The company stated that a large amount of electrical infrastructure, pressure air systems and ventilation have been damaged. This will require renovations, which are estimated to take a few weeks. The company that operates seven mines, five smelters, and five smelters throughout the Nordic region, Ireland, and Portugal, has said that seismic activity at Garpenberg is now decreasing, and mining production will start in the second quarter. Boliden reported last month that its fourth quarter adjusted earnings were below analyst expectations. However, it proposed a dividend higher than expected for 2025. Recent performance of the company has been improved by higher gold prices. This has increased realised revenue from precious materials collected as a byproduct during mining and smelting. The company also benefits from higher prices for zinc.
Stocks are on edge after Middle East ceasefire negotiations take centre stage
Investors treaded carefully amid the dizzying Middle East developments, as Iran said it would consider a U.S. proposal to end the Gulf Conflict.
The escalating war has jolted the global markets. Oil prices have soared, rekindling inflation fears, and causing global interest rate expectations to be thrown into chaos.
In early Asian trading, the Nikkei was up 0.6% and South Korean stocks were down by 1.2%. MSCI's broadest Asia-Pacific share index outside Japan edged down 0.23%, setting up for an 8.7% drop in the month. This is its largest monthly decline since October 2022.
The dollar remained near its recent highs, and was on track for a monthly gain of 2%. This cemented the dollar's status as a safe haven.
Iran's latest remarks suggest that Tehran is willing to "negotiate" an end to war, if their demands are met. The U.S. has sent Iran a 15 point ceasefire proposal that was initially brushed aside by Iranian officials.
Chris Weston is the head of research for Pepperstone. He said: "While headlines indicate a more positive tone, markets are unsure about which signals they can trust and act on."
Price action indicates that participants are expecting further twists and turn, even though the likelihood of a negotiated result is increasing.
The 'war' that lasted for nearly a month, triggered by the joint U.S. and Israeli strikes against?Iran late in February, has effectively closed the Strait of Hormuz. This is a conduit used to transport a fifth of all global oil and liquefied gas.
Prices have soared above $100 per barrel due to the disruption. Brent crude futures are at $103.35 a barrel, up by 1% for the day and on track to see a 42% increase in the next month.
It will be difficult to reconcile all of these points if you consider what the U.S., Israel, and Tehran want to achieve," said Matthias Scheiber. He is a senior portfolio manager at Allspring Global Investments and head of their Multi Asset Team.
"We think that there are still arguments to be made for higher energy prices?for the time being."
Fears that soaring oil prices could cause an inflationary shock have led traders to discount any chance of a Federal Reserve rate cut this year. This has helped boost the dollar. The dollar has been boosted by traders who have priced out any?chance of a Federal Reserve?rate cut this year.
The European Central Bank's Christine Lagarde said on Wednesday that she would consider raising interest rates if the war in the Middle East continues to push up inflation in the region.
Lagarde said in Frankfurt that if the shock leads to a large but not too persistent overshoot, a measured adjustment of policy may be warranted.
The euro was little altered at $1.1562, while sterling purchased $1.3358. The yen was hovering at 159.43 dollars, clinging to the 160 level traders are watching as a possible trigger for intervention.
Gold was up 0.66% at $4,537 an ounce. However, it has been largely selling off in this month. It is now on track for a 14 percent drop, the steepest since October 2008. (Reporting and editing by Shri Navaratnam in Singapore)
(source: Reuters)